The appeal filed by the assessee for Assessment Year 2020-21 arose from an order passed by the Commissioner of Income Tax (Appeals) / National Faceless Appeal Centre, Delhi, confirming an assessment framed under Section 153A read with Section 143(3) of the Income-tax Act, 1961.

The primary legal contention raised by the assessee was that the assessment had been erroneously framed under Section 153A instead of a regular assessment under Section 143(3), despite the relevant assessment year allegedly falling outside the permissible block period. Upon careful consideration, the Tribunal observed that, in addition to the search conducted on 27.02.2020 in the Raipur Group of cases, a subsequent warrant of authorization dated 19.11.2020 had also been issued. Consequently, Assessment Year 2020-21 validly fell within the block of six assessment years contemplated under Section 153A. Accordingly, the assessee’s challenge on this legal ground was rejected.

With regard to the challenge against the transfer of jurisdiction under Section 127(2) from ITO-1, Raipur to ACIT, Central Circle-1, Delhi, the Tribunal held that no material infirmity had been demonstrated. Further, such an administrative transfer could not form the subject matter of adjudication before the Tribunal. This ground was therefore dismissed.

The substantive issue related to additions aggregating to ₹1,36,03,896 and two further sums of ₹51,60,520 and ₹51,45,000, which were treated as unexplained money under Section 69A read with Section 115BBE. The Tribunal noted that the major portion of these additions was based on evidence seized from the premises of M/s Gentle Entertainment Pvt. Ltd., a third party, and not from the possession or control of the assessee.

Relying on its earlier decision in the assessee’s own case for Assessment Year 2019-20 and the binding judgment of PCIT v. Anand Kumar Jain, the Tribunal held that where incriminating material is found from the premises of a third party, any consequential addition must necessarily be made by invoking proceedings under Section 153C and not under Section 153A. On this legal basis alone, the additions relating to third-party premises were deleted.

However, with respect to cash amounting to ₹51,60,520 found and seized from the residential premises of the assessee, the Tribunal applied the statutory presumption under Section 292C. As the assessee failed to provide any satisfactory explanation regarding the source of such cash, the addition was sustained.

Accordingly, the appeal was partly allowed, granting relief in respect of additions based on third-party evidence while confirming the addition relating to unexplained cash found at the assessee’s premises.

Source Link- https://itat.gov.in/public/files/upload/1767176004-gWkPhr-1-TO.pdf

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